A senior general manager with Indian Bank said that a special discount package of airfare-plus four days to Singapore at an EMI of Rs 844 (to be paid over 24 months), which was launched in December, had received a good response.

The three-day trip to Singapore was made available to customers, as Indian Bank had entered into a tripartite agreement with the Singapore Tourism Board and Air-India.

Indian Bank now plans to enter into agreements with other carriers for different destinations as its agreement with Air-India ends on June 30.

While Indian Bank's focus was only the trip to Singapore, Indian Overseas Bank's Shubh Yatra and Bank of India's Star Holiday Plan fund trips across the globe.

G Gopinath, general manager, Indian Overseas Bank, said the bank was revamping Shubh Yatra, a loan scheme for foreign travel, launched two years ago.

"To be competitive, we are restructuring the product and it may come at a lesser interest rate," Gopinath added.

A senior general manger with Indian Bank said a travel loan is more advantageous than a personal loan as it comes at a lesser interest rate owing to tie-ups with air carriers and travel companies. With private air carriers such as Jet Airways and Air Sahara flying overseas at discounted rates, it is a good value proposition.

Shubh Yatra charges 14.50 per cent per annum and the loan can be repaid over a maximum of 36 months. Bank of India offers Star Holiday Plan at rates varying from 10.75 to 13.25 per cent (inclusive of air fare, accommodation and sightseeing). The loan can be repaid within three years.

IOB charges a processing fee of a maximum of Rs 150 for Rs 100,000, while private banks charge a minimum processing fee of Rs 500. The cost of acquiring a visa will have to be borne by the customer.

The key requisite for availing of a travel loan is a salary certificate or income proof. In the case of IOB, the eligible criteria is an annual household income of Rs 120,000. The maximum loan that can be availed is ten times the gross monthly household income.

If you are wondering about collaterals for the loan, banks accept national saving certificate, fixed deposits, LIC policy, shares of reputed companies or immovable properties which cover 100 per cent of the loan amount.

If all the documents are in place, the loan is processed within 48 hours to a week. Private banks too have tied up with travel and tour operators for similar products.

Kotak Mahindra has a tie-up with SOTC, while UTI Bank has tied up with Cox and Kings. The rates charged by private banks are, however, slightly higher than public sector banks at 15-16 per cent.

The Easy Way Out

Travel loan is more advantageous than a personal loan as it comes at a lesser interest rate owing to tie-ups with air carriers and travel companies

IOB's Shubh Yatra charges 14.50% per annum and the loan can be repaid over a maximum of 36 months. The bank charges a processing fee of a maximum of Rs 150 for a lakh of loan amount.

Bank of India's Star Holiday Plan rates varying from 10.75 to 13.25 per cent (inclusive of air fare, accomodation and sightseeing). The loan can be repaid within three years.